Publications
What Goes Up May Not Come Down: Asymmetric Pass-through of Consumption Taxes (with Youssef Benzarti, Jarkko Harju and Tuomas Kosonen), Journal of Political Economy, 128.12 (2020): 4438–4474. This paper shows that prices respond more to increases than to decreases in Value-Added Taxes (VATs). First, using two plausibly exogenous VAT changes, we show that prices respond twice as much to VAT increases than to VAT decreases. Second, we show that this asymmetry results in higher equilibrium profits and markups. Third, we find that firms operating with low profit margins are more likely to respond asymmetrically to the VAT changes than firms operating with high profit margins. Fourth, this asymmetry persists several years after the VAT changes take place. Fifth, using all VAT changes in the European Union from 1996 to 2015, we find similar levels of asymmetry.
Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France
(with Youssef Benzarti), American Economic Journal: Economic Policy, 11.1 (2019): 38-63.
This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four groups: workers, firm owners, consumers and suppliers of material goods. Using a difference-in-differences strategy on firm-level data we find that: (1) the effect on consumers was limited, (2) employees and sellers of material goods shared at most 18 and 12 percent of the total benefit, with limited employment effects and (3) the reform mostly benefited owners of sit-down restaurants, who pocketed at least 55 percent of the tax cut.
Press coverage: VoxEu - Alternatives Economiques - IPP Policy Brief - AEA
The Electoral Consequences of Large Fiscal Adjustments (with A. Alesina and G. Lecce), in Fiscal Policy After the Great Recession, edited by A. Alesina and F. Giavazzi, 531-572. Chicago: University of Chicago Press and NBER, 2013.
Press Coverage: The Economist - Reuters - Voxeu
Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France
(with Youssef Benzarti), American Economic Journal: Economic Policy, 11.1 (2019): 38-63.
This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four groups: workers, firm owners, consumers and suppliers of material goods. Using a difference-in-differences strategy on firm-level data we find that: (1) the effect on consumers was limited, (2) employees and sellers of material goods shared at most 18 and 12 percent of the total benefit, with limited employment effects and (3) the reform mostly benefited owners of sit-down restaurants, who pocketed at least 55 percent of the tax cut.
Press coverage: VoxEu - Alternatives Economiques - IPP Policy Brief - AEA
The Electoral Consequences of Large Fiscal Adjustments (with A. Alesina and G. Lecce), in Fiscal Policy After the Great Recession, edited by A. Alesina and F. Giavazzi, 531-572. Chicago: University of Chicago Press and NBER, 2013.
Press Coverage: The Economist - Reuters - Voxeu
CBO Working Papers
CBO’s Model for Estimating the Effect That Federal Taxes Have on Capital Income From New Investment (with Paul Burnham), CBO Working Paper 2022-01. [Model code in Python]
Distributional Effects of Reducing Carbon Dioxide Emissions With a Carbon Tax (with Terry Dinan), CBO Working Paper 2021-11.
Revisiting the Extent to Which Payroll Taxes Are Passed Through to Employees, CBO Working Paper 2021-06.
The Effect of Tax-Motivated Transfer Pricing on U.S. Aggregate Trade Statistics (with Daniel Fried and Molly Saunders-Scott), CBO Working Paper 2019-05.
How Nominal Foreign Currency Depreciation Against the U.S. Dollar Affects U.S. Wealth, CBO Working Paper 2018-05.
Distributional Effects of Reducing Carbon Dioxide Emissions With a Carbon Tax (with Terry Dinan), CBO Working Paper 2021-11.
Revisiting the Extent to Which Payroll Taxes Are Passed Through to Employees, CBO Working Paper 2021-06.
The Effect of Tax-Motivated Transfer Pricing on U.S. Aggregate Trade Statistics (with Daniel Fried and Molly Saunders-Scott), CBO Working Paper 2019-05.
How Nominal Foreign Currency Depreciation Against the U.S. Dollar Affects U.S. Wealth, CBO Working Paper 2018-05.
